Pareto Bank’s ship financing portfolio grew in the second quarter.
The Oslo-listed niche lender’s shipping and offshore loans increased to NOK 1.81bn ($167m) from NOK 1.54bn at the end of the first quarter.
“We expect a moderate growth in the third quarter in both the shipping and offshore segments,” chief executive Tiril Haug Villum said at the results presentation in Oslo.
Corporate loans make up 73% of the exposure to shipping, and offshore and lendings to investment projects represent 27%.
“We target solid Norwegian shipping companies and the project finance market,” Haug Villum said.
The biggest segment in the book was offshore subsea, which grew to NOK 490m from NOK 427m a quarter ago.
The bank has a “robust demand outlook for the offshore markets supported by strong increase in E&P spending and limited fleet growth”, according to the quarterly report.
Lending to offshore accommodation was stable at NOK 267m.
Loans for bulkers and offshore supply stood each at about NOK 260m.
The bank keeps a “healthy outlook for the dry bulk market due to low supply growth. Uncertainty on demand side as Chinese growth and global economic growth soften.”
Container loans amounted to NOK 65m.
“The rerouting of container vessels due to Red Sea disruption has led to a significant demand increase and increased waiting time in ports.
“Reversal of the disruption will most likely lead to downward pressure on rates as high supply growth regains key attention,” Pareto Bank said.
Loans to product and chemical tankers were in total NOK 70m.
“Strong tanker markets, backed by modest supply growth, continued strong end-user demand and increased trade growth,” the bank said.
The average commitment size is $12.1m and the largest exposure is $27.3m.
The credit quality was stable with an average weighted loan to value of 41%, excluding exposure to offshore accommodation, which has very low loan to value.
The bank said it maintained its “conservative approach focusing on corporate customers with solid balance sheets, modern high-quality assets and equity contribution of minimum 45%”.
The annualised margin for the ship financing business area is 4.5%.
The number of customers was unchanged at 14 in the second quarter.
It also said clients continue to have “steep repayment profiles on loans”.
Second-quarter profit was NOK 178m, compared with NOK 154m for the same period last year.
